Ulta (ULTA) Shares Skyrocket, What You Need To Know

Anthony Lee /
2023/12/01 10:40 am EST

What Happened:

Shares of beauty, cosmetics, and personal care retailer Ulta Beauty (NASDAQ:ULTA) jumped 9.8% in the morning session after the company reported third quarter results with same-store sales beating convincingly, although revenue only narrowly topped expectations. Profitability was sound, leading to a nice EPS beat in the quarter. The company raised its full year outlook for important metrics such as same-store sales, revenue, and EPS. Finally, management commentary in the release was optimistic, citing healthy traffic trends and a good setup for the important holiday shopping season. 

The beauty category seems to be holding up well despite a backdrop of consumer uncertainty, fueling the argument that many beauty products are more staples-like than discretionary (consumers buy them both in good economic times and bad). As a reminder, when Target reported its quarterly results on November 15, 2023, the consumer bellwether also called out strength in beauty purchases. Zooming out, we think this was a solid quarter, showing that the company is staying on target.

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What is the market telling us:

Ulta's shares are not very volatile than the market average and over the last year have had only 2 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

Ulta is up 0.1% since the beginning of the year, but at $472.55 per share it is still trading 14.3% below its 52-week high of $551.43 from April 2023. Investors who bought $1,000 worth of Ulta's shares 5 years ago would now be looking at an investment worth $1,540.

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